(Refiles to fix typo in bullet point on Dow to read "May 3") * Weak jobs data taken as a positive for stocks * Blue-chip Dow ends above 11,000 for first time since May 3 * Agricultural shares rallies on USDA corn crop forecast * Dow up 0.5 pct, S&P up 0.6 pct, Nasdaq up 0.8 pct
* For up-to-the-minute market news see [STXNEWS/US] (Updates to close)
By Leah Schnurr
NEW YORK, Oct 8 (Reuters) - The Dow closed above the 11,000 mark for the first time in five months on Friday as a surprisingly weak jobs report strengthened the case for more stimulus from the Federal Reserve.
While a loss of 95,000 jobs normally might be expected to hurt stocks, the market's desire for cheap money trumped concerns about the slow economy.
"It was almost as if the market was cheering for a bad report to try to solidify that the Fed would engage in quantitative easing," said Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors in St. Louis.
Agriculture-related shares surged in sync with U.S. corn and soybean futures after the U.S. Department of Agriculture said the corn crop is likely to be far smaller than expected. Dow component Caterpillar rose 2.1 percent to $80.37. For details, see [ID:nN08236238]
A construction and farm machinery sector index <.15GSPMCHD> rose 2.6 percent on the belief U.S. grain farmers will use some of their profits from higher crop prices to buy new tractors and harvesting equipment.
Deere & Co
Stocks have rallied in recent weeks on expectations of further government stimulus, but earnings season will take center stage next week. Corporate results and guidance could provide confirmation for the gains or suggest investors were blindly chasing performance.
Expectations of more quantitative easing could also keep the U.S. dollar on a downtrend, which in turn signals more gains for Wall Street. An inverse correlation between the greenback and U.S. stocks has prevailed in the last three months.
The Dow Jones industrial average <.DJI> gained 57.90 points, or 0.53 percent, to close at 11,006.48. The Standard & Poor's 500 Index <.SPX> rose 7.09 points, or 0.61 percent, to 1,165.15. The Nasdaq Composite Index <.IXIC> climbed 18.24 points, or 0.77 percent, to 2,401.91.
It was the first time the Dow closed above 11,000 since May 3.
For the week, the Dow and the S&P 500 each rose 1.6 percent, while the Nasdaq gained 1.3 percent.
Consumer discretionary companies got a boost after hedge
fund manager William Ackman took large stakes in shares of
retailer JC Penney Co Inc
Alcoa Inc
Data showed the economy shed jobs in September for a fourth straight month as government payrolls fell and private hiring slowed. Although initially taken as a negative, investors ultimately viewed the gain of 64,000 private-sector jobs as the economic cloud's silver lining, analysts said. For details, see [ID:nN08205203].
The expectation of further stimulus was also weighed against comments from St. Louis Fed President James Bullard, who said the Fed faces a difficult decision at next month's policy meeting on whether to offer further stimulus to a U.S. economy that is still growing but only slowly. [ID:nN08199744]
"I think he said it's not in the bag that we're going to do this," Marcouiller said.
As the drop in the government's non-farm payrolls report increased the likelihood of more quantitative easing by the Fed, the dollar weakened while commodity prices rose.
The Reuters Jefferies CRB index <.CRB>, which covers 19 mostly U.S.-traded commodities, rose 2.7 percent.
Freeport-McMoRan Copper & Gold Inc
Options traders also remained confident about the market as the volatility index continued to slide. The CBOE Volatility index <.VIX>, Wall Street's favorite fear gauge, fell 3.9 percent to 20.71, the lowest since May.